Indian Real Estate: The Impact of Transit-Oriented Development - TOD

Today, the scale of
urbanization in India is only 33%, whereas the size of the urban population is
about 429 million - much larger than that of many other countries, according to
World Bank data.

The fact that Indian cities are among the fastest-growing in
the world is clearly evident from JLL’s recent Cities Momentum Index 2017 – a
research report which identifies the world’s 30 most dynamic cities. 6 out of
30 cities, namely Bangalore, Hyderabad, Pune, Chennai, Delhi and Mumbai, are in
India.

Though it is an indicator of positive development, rapid
urbanization is also accompanied by a host of challenges. The growing urban
sprawl in India is leading to increased use of private vehicles, congested
roads, increased pollution, public safety issues, increased household spending
– and the stress that increasing population puts on the existing infrastructure
of our cities.

Many of these problems can be solved or at least significantly
reduced by cities augmenting their public transport systems and also integrating
land use planning and development with the transport network. Such solutions
can lead to markedly improved infrastructure efficiency – and a better quality
of life for citizens.

Transit Oriented Development (TOD)..!

After focused efforts to dovetail infrastructure and technology
through its AMRUT and Smart Cities programs, the Government of India is now
turning its attention to developing a Transit Oriented Development (TOD) policy
to support the transformation process already underway in most of the Indian
cities. This transformation will attract lot of investments to the respective
cities, and vastly increase their ‘livability’ in a sustainable manner.

Essentially, TOD is any macro or / micro development focused
around a transit node which results in improved ease of access to the transit
facility. When done correctly, such developments encourage citizens to prefer
walking and using public transportation over using private vehicles.

Globally, cities like Singapore and Hong Kong in Asia, Curitiba in
Brazil, Stockholm in Sweden and Washington DC in the US have TOD as an integral
element in their master planning, and integrated with their mass transport
networks.

The success and inherent inducements for growth that TOD delivers in
these cities is remarkable. About 26-30% of these countries’ populations - and
the majority of their job centres - are along Metro corridors.

The TOD trend is now gradually making its mark in India, as
well. Cities like Delhi, Ahmedabad, Mumbai and Chennai now have extensive
high-order transit options either in place or in the planning stage. BRT (Bus
Rapid Transit), LRT (Light Rail Transit) and MRT (Metro Rail Transit) are
actively exploring the TOD opportunities in these cities by exploiting higher
FSI along transit corridors for developments.

It is safe to state that TOD will be the future of urbanization,
and that it will have a major impact on various sectors – not least of all the
real estate industry.

Direct & Indirect Benefits of Transit-oriented Development..

(1)Releases
under-utilized urban lands..!

The major reasons for urban sprawl and
shortage of urban land is the fact that urban lands are not exploited to their
optimal potential. TOD opens up dense developments near transit nodes through
relaxed FSI norms, thereby increasing the developable area in the same piece of
land.

(2)Ensures sustainable
urban growth..!

TOD curtails urban sprawl and hence reduces the
strain on existing infrastructure. This helps in achieving compact and
controlled developments within the cities, and reduces the average travel time
and household spends on transportation.

(3)Increased modal shift
towards Non-Motorized Transport (NMT)..!

Done correctly, TOD
creates a balanced mix of land use through concentrated residential development
at a walking distance of 500 to 800 m along the transit corridor, or from the
transit station.

This increases ‘walkability’, encourages public transport use
and also makes ‘last-mile’ options such as cycle sharing systems much more
viable.

(4)Increased financial
viability of transit investments..!

Increase in the modal shift
increases the ridership (the number of
passengers using a particular form of public transport) by
improving access to transit stations through seamless connectivity. This
enhances the economic and financial viability of transit investments.

It also
helps in better channelling of peak hour traffic along both directions,
improving the efficiency of existing vehicle fleets.

(5)Improved quality of
life with better places to live, work and play..!

Factors such as
increased walkability, reduced traffic congestion and shorter commutes result
in more leisure hours, reduced pollution, more reliable and safer public
transport systems, mixed-use development, and efficient and shared open spaces.
All these add up to significantly improved quality of life for citizens.

(6)Efficient management
of infrastructure spending..!

In a city, a lot of infrastructure
investments are often planned for the fringe areas owing to the urban sprawl
and lack of infrastructure facilities. Infrastructure spends also need to be
concentrated to benefit the core cities; it costs less to build roads/
expressways and other physical infrastructure for the urban sprawl.

Also,
transit options are first developed within city limits and later scaled to
outer areas. Effectively optimizing these spends within the city limits is
critically important, and is the perfect solution. Also, TOD exploits available
urban lands to the maximum, thereby making enough space available to meet the
growing demand for affordable housing.

TOD increases housing availability, and
mandatory caps for the construction of EWS housing also indirectly helps
increase in the supply of such housing.

(9)Expanded economic
opportunities and public safety,especially for women,
who prefer to travel shorter distances to work in India. Many Indian cities are
now working on improving general public safety and particularly reducing crimes
against women.

Commercial activity (hawkers, shops) at street levels on major
walkways and other commuting paths create safer neighbourhoods by facilitating
more ‘eyes on the street’.

TOD also impact and change the dynamics of commercial real
estate to a great extent. Increased FSI along transit corridors or 500 m to 800
m near the transit station will result in increased land cost by about 10-15%,
projected to be about 1.6 to 1.7 times the existing GLV (Guide Line Value).

The
demand for retail or commercial spaces along the corridor increases on the back
of improved accessibility, while residential demand also increases due to
maximized employment opportunities, reduced commuting times and costs, etc.

TOD not only significantly alleviates residents’ daily commuting
hassles, but also brings the collateral benefit of boosting property prices via
the premium placed on residential premises situated close to the public transit
system like MRT and BRT), since there are immense savings in terms of reduced
time and cost.

The rentals of the residential units also increase
significantly, as more people will want to live near Metro stations to benefit
from faster and cheaper transport. If the feeder service is strengthened, this
impact will expand the influence zone to 4-5 km from Metro
stations.

To summarize

In short, TOD is literally the last lap to achieve sustainable
urban transformation in amalgamation with various initiatives and concepts such
as Smart Cities, AMRUT, NMT, MMI (Multi-Modal Integration), Last Mile
Connectivity options, Green Mobility Schemes, etc. It makes walking more viable
to live, work and play rather than using private modes of transport.

As the
indubitable future of urbanization in India, TOD requires dedicated fund
allocations from Governments (depending on the size and positioning of the
city) for its effective implementation.

Indian Real Estate: The Impact of Transit-Oriented Development - TOD
Reviewed by S. Chitra
on
April 19, 2017
Rating: 5 India Real Estate: The Impact of Transit-Oriented Development - TOD TOD has the power to transform the future of Indian cities ...